Fannie Mae’s Economic and Strategic Research Group (ESR) released its November 2017 Economic and Housing Outlook, which includes monthly updates on economic development, economic forecast, multifamily market commentary, and housing forecast.
This month, economic developments reported the first print of Q3 economic growth showed surprising resiliency—as the expected economic hit from the recent natural disasters either failed to materialize or was drowned out by business optimism.
“Recent data showed a stronger pickup in domestic demand than anticipated, leading us to increase our growth forecast for the final quarter of this year and coming quarters,” said Fannie Mae Chief Economist Doug Duncan.
The economic growth forecast report revealed an increase by two-tenths to 2.4 percent following a stronger-than-expected estimate of Q3 real GDP growth and an improvement to the Q4 outlook.
“We also revised higher our 2018 growth forecast to 2 percent,” Duncan added. “Tax cuts, if enacted, present upside risk to our growth forecast for next year but could also lead to more aggressive Fed action. Housing still remains a drag on the economy, as shortages of labor and available lots, coupled with rising building material prices, further complicate existing inventory, affordability, and sales challenges.”
The group’s housing forecast outlook reveals that housing remains a soft spot, and is expected to “subtract from GDP growth for the third consecutive quarter” as low housing inventory continues to provide challenges to home prices at the expense of affordability.
In addition, Fannie Mae announced on Thursday that it will resume low-income housing tax credit (LIHTC) activities in an effort to provide a reliable source of capital for affordable rental housing and underserved markets.
According to the release, the Federal Housing Finance Agency (FHFA) approved Fannie Mae’s re-entry into the LIHTC market as an equity investor effective immediately.
Jeffery Hayward, EVP, Multifamily at Fannie Mae said this is a significant step forward for the enterprise to better serve the multifamily market and play an integral role in addressing America’s affordable housing crisis.
“The LIHTC program has long been the most effective tool at driving housing supply for low- and very low-income families,” Hayward said. “Fannie Mae’s renewed participation in these business activities will support the LIHTC market by providing a reliable source of capital and a stabilizing influence on affordable housing throughout diverse economic markets and cycles.”
Since its beginning, the LIHTC program has built nearly 3 million apartment units, housing about 6.7 million low-income families, and currently finances the construction and rehabilitation of almost all subsidized housing in the U.S.